Incentives for Life Sciences & Healthcare companies in the fight against COVID-19
RESPOND – A global COVID-19 response for legal leaders
The Life Sciences & Healthcare industry is crucial in the fight against COVID-19. Governments want to incentivise companies to contribute at every level of the COVID-19 related supply chain, be it R&D, testing, or manufacturing.
- Temporary Framework for assessing antitrust issues
- How can companies cooperate
- Get in touch
It is also clear that, at times, competitors need to cooperate more closely in order to ensure a near-perfect allocation of scarce resources. For this purpose, competitors may need to share more sensitive information than they would typically do, or they may need to coordinate their production. Under normal circumstances, that would not happen for fear of infringing antitrust laws, risking crippling fines, and having to face damage claims in court.
The European Commission has created an overall framework for governments and for companies to meet these needs, specifying:
- Which government aid will be approved by the European Commission if the Member State notifies the aid measure;
- Which forms of cooperation between competitors the Commission will allow in order to ensure the supply and adequate distribution of essential, scarce products and services, most notably medicines and medical equipment that are used to test and treat COVID-19 patients, or are necessary to mitigate and overcome the outbreak; and
- Guidelines for governments focusing on rational supply, allocation and use of medicines to treat COVID-19 patients in order to protect public health, and preserve the integrity of the single market. The guidelines explicitly mention that they rely on the EU pharmaceutical industry acting responsibly and with solidarity.
Temporary Framework for assessing antitrust issues related to cooperation in COVID-19 urgent situations
On 8 April 2020, the European Commission adopted a Temporary Framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the COVID-19 pandemic. It covers possible forms of cooperation to ensure the supply of essential scarce products and services during the COVID-19 pandemic.
It also revives the old “comfort letter” practice whereby companies can consult with the Commission and request confirmation that the intended cooperation between competitors will not be in breach of antitrust laws.
Any cooperation otherwise caught by antitrust laws, and not covered by the Temporary Framework, will remain subject to antitrust investigations and fines. This is explicitly stressed by the European Commission, while referring to the existing whistleblowing notice for cartels and the possibility for companies to file complaints with the European Commission and national competition authorities.
How can companies cooperate to combat COVID-19?
Certain forms of cooperation are always allowed because they are not illegal under regular antitrust rules, provided that a third party manages it:
- Coordinating joint transport for input materials
- Identifying medicines for which shortage is forecasted
- Aggregating production and capacity information
- Modelling/predicting demand at Member State level
- Sharing the aggregate supply gap information and enquiring individually on capability to fill the supply gap
Certain forms of cooperation are now temporarily allowed
- Exchanging commercially sensitive information, and
- Coordinating production
- Cooperation is objectively necessary to actually increase output in the most efficient way to address or avoid a shortage of supply of essential products or services.
- Cooperation is only temporary (during the COVID-19 outbreak).
- Cooperation does not exceed what is strictly necessary to achieve the objective.